The CFR has recently issued guidelines on the interpretation of what is deemed to constitute healthcare services. These interpretations are particularly relevant since such type of services are exempt (without credit) from VAT. These interpretations are in line with recent EU jurisprudence
The VAT Act specifically exempts from VAT:
- The supply of medical care by a person in the exercise of any profession regulated by the Health Care Professions Act (Cap. 464) or the Psychology Profession Act (Cap. 471)
- The provision of care or medical or surgical treatment in any government hospital or institution or in any other hospital or institution approved by the Minister
A. Medical Care Supplied by Professionals
In connection with the first exemption, the following two conditions must be satisfied:
(a) The supply must be a supply of “medical care”; and
(b) The supply must be provided by a person in the exercise of any profession regulated by the Health Care Professions Act or the Psychology Act.
(Consequently, only medical care services by health care professional are exempt. Any other services by health care professionals might not fall within the scope of this exemption.)
The term “medical care” shall be interpreted to mean any services that have their one of the following purposes:
- The protection (including maintaining and restoring) of human health and the diagnosis; or
- Treatment and, in so far as possible, the cure of diseases or health disorders in humans.
B. Care or medical or surgical treatment in hospitals/clinics:
For this exemption to be applied, two conditions must be cumulatively satisfied:
- The supply must be a supply of “care or medical or surgical treatment”; and
- The supply must be provided by a government hospital or institution or in any other hospital or institution approved by the Minister for the purpose of this exemption.
The term “Care or medical or surgical treatment” must constitute:
- “Medical care” which is delivered by a “Health Care Professional”; and
- Any activities which are closely related and essential to the supply of such medical care without such activities, it is not possible to achieve the objectives pursued by the related supply of medical care, i.e., to protect, diagnose, treat, and cure diseases or health disorders in humans.
“Other hospital or institution approved by the Minister” for the purpose of this exemption shall be an entity that is aligned with the legal requirements determined by the relevant competent authorities to render supplies of care, or medical or surgical treatment as defined in this Guideline.
C. Medical cosmetic services:
Supplies whose purpose is to alter, change, improve, or modify, in any way, the appearance of the human body provided or delivered by Health Care Professionals, may also qualify for an exemption (without credit) in so far as they qualify as supplies of “medical care”.
In applying this exemption on the supplies of a cosmetic nature, healthcare professionals such as cosmetic or plastic surgeons should retain the following records:
- Type of service provided.
- Brief medical justification for exempting any supplies of an aesthetic or cosmetic nature.
- Details and warrant number of the Health Care Professional providing the justification.
- Unique identification number linking the supply to a specific patient.
- Value of the service.
- Date(s) the service was provided.
FF International provides a vast range of advisory, tax, VAT and compliance services.
For further information, please contact:
Franco Falzon C.P.A. LL.M (Managing Director)
E: franco@ffinternational.com.mt
T: +356 2010 7771 (office)
M: +356 9989 5679 (mobile)
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